Annual EBHS Conference, 39th Annual Economic and Business History Society Conference

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The Stabilising Effects of the Dingley Tariff and the Recovery from the 1890s Depression in the United States
Peter H. Bent

Last modified: 2014-03-10

Abstract


This paper seeks to fill a gap in the literature regarding the recovery from the 1890s depression, by asking the question: What role did the Dingley Tariff play in getting the American economy out of the post-1893 depression? It is seen that the most significant impact the Dingley Tariff had was to return the economy to its previous equilibrium based on high tariff levels and a balanced budget. During the 1890s ‘[c]onfidence was to be found nowhere. Hunger, nakedness, fear, disaster, trouble were to be encountered everywhere’ (Grosvenor, 1900, p.42). It is argued herein that the Dingley Tariff played a significant role in helping the economy recover from the downturn, as the tariff instilled confidence in the business community by generating revenue for the federal government and stabilising the economy. This in turn encouraged the business community to begin investing more readily, as they were able to feel more certain about the future economic conditions in the country. Anticipated price recovery was an important aspect of this renewed confidence. With these changing conditions, the economy reversed its downward trend and began to grow again.

These trends are supported by the aggregate economic data estimates from the late-nineteenth and early-twentieth centuries, which show that the economy was unstable during the mid-1890s. This instability is a useful way to interpret the economic conditions of the mid-1890s, in that it emphasises that the economy was wracked with uncertainty during the depression. This analysis suggests a role for the Dingley Tariff as being a stabilising factor which helped bring the economy out of the depression, as it erased elements of uncertainty by providing the government with increased revenue and by assuring American businesses that they would be afforded generous protection under the new tariff legislation. This paper contributes to the literature by arguing in greater depth and scope that this indeed was the case, and that these stabilising influences of the Dingley Tariff were the most important ways in which it promoted recovery from the post-1893 depression.

The substantive sections of this paper construct an analysis of how the Dingley Tariff marked the end of a period of anxious uncertainty regarding the level of protection that American businesses could expect to receive under federal tariff legislation. An analysis of the aggregate economic data presents the interpretation of the mid-1890s as being a time of economic instability. Then a case study of the wool industry provides evidence from underused primary sources to support this narrative of the Dingley Tariff’s importance for stabilising the business environment, by assuring the business community (e.g. the wool industry) that it would be afforded lasting protection under high tariff legislation as the economy settled back into the conditions that favored growth prior to the onset of the depression.